Tirole17-20 - Tirole J(2006 Corporate Governance Tutorial 2...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Tirole, J. (2006) Corporate Governance Tutorial 2 pp. 17-20 Section 1.1.2 Dysfunctional Corporate Governance - Managerial misbehaviour is only the “tip of the iceberg” of the moral hazard caused by dysfunctional corporate governance. - Other forms of dysfunctional corporate governance : 1. Lack of transparency: Investors and other stakeholders are sometimes imperfectly informed about the levels of compensation granted to top management. Ex.: managerial stock options, perks, recruiting practices 2. Level: The total compensation package (salary plus bonus plus long-term compensation) of top executives has risen substantially over the years and reached levels that are hardly understandable to the public. The proponents of high levels of compensation point out that some of this increase comes in the form of performance-related pay: more bonuses and stock options 3. Tenuous link between performance and compensation: Four reasons why the link between performance and compensation may be poorly:
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

This document was uploaded on 11/10/2011.

Ask a homework question - tutors are online